Expenses off-set against income tax

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    #16
    aha.. that sounds like a plan. problem is I recently signed a re-mortgage for capital and interest. will see if they willing to change to interest only. alternatively sell the property. I was previously on an interest only at a worse rate and wanted to re-mortgage to a capital mortgage to pay loan of sooner. perhaps that was the mistake. should stick with interest. The property made decent equity even on the interest only mortgage.

    Comment


      #17
      It depends on your time scale - there's nothing fundamentally wrong with using rent income to create equity.
      It's just a longer term plan.

      If you sell you'll probably have the same early term penalty as changing product.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #18
        Originally posted by xenoid View Post
        monthly rent 1250 ... buy-to let mortgage 873.12 - certificates (elec, gas, PAT, Fire and risk, EPC), maintenance and repairs, council landlord licence costs, service charges, landlord insurance.... all of these quickly erode the rental income.. mortgage is high since is an overseas Buy to let mortgage... any good advise?
        Does this £873.12 include the Capital repayment element of your mortgage or is it just the interest?
        Are you aware you can't claim tax relief on the Capital element. If it does include the capital repayment, then you aren't losing this money but paying equity into your property.

        It is concerning that you expect HMRC to make a cash payment for your losses.

        You should sell.

        Comment


          #19
          You have had some exceptional repairs bills e.g. electrics.

          Sellers are getting a good price. Not a bad time to sell.



          Comment


            #20
            Originally posted by xenoid View Post
            jpkeates,

            Indeed its a capital repayment mortgage at 3.09% (very high i know) .. not many lenders will to remortgage for overseas BTL at a good rate.. value of property is £330 000 and Rent £1250 increasing to £12750 in august... still not good enough for expenses. So I will sell the property.
            recent electrical re-wiring set me back £4000 as well.
            Interest rate charged at 3.09% is about 1% higher compared to 2% interest rates paid by local borrowers. If your mortgage loan is £200K, your annual interest is costing around £6,180 .
            If your rental level is £1250 per month, your rental income will be £15K .

            So roughly, your operating expenses will be around £5K and estimated profit will be £10K .
            If you carry a UK or EU passport, you can claim the personal allowance and no tax is payable.
            If you don't qualify to claim for personal allowance , then your tax on annual profit of £10K will be £2K.

            I am not sure if non-residents can claim tax credit for 20% on the £6180 loan interest = £1236. which can reduce the tax bill from £2K less £1236 to £764.approx.

            The repayment mortgage of £873 per month includes £6180 loan interest and £4200 repayment of capital towards reducing the mortgage loan.

            Comment


              #21
              Originally posted by xenoid View Post
              aha.. that sounds like a plan. problem is I recently signed a re-mortgage for capital and interest. will see if they willing to change to interest only. alternatively sell the property. I was previously on an interest only at a worse rate and wanted to re-mortgage to a capital mortgage to pay loan of sooner. perhaps that was the mistake. should stick with interest. The property made decent equity even on the interest only mortgage.
              Interest ONLY mortgages need to be banned

              Comment

              Latest Activity

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              • Damaged artwork expense
                by jtufty
                Hi all

                Silly minor question really. Last week the tenant accidentally knocked a framed picture off the wall and smashed it. It was only a cheap thing (I guess value was £10). I went out and bought a replacement picture for her. (I know I didnt have to, but shes a good tenant). I bought...
                24-09-2021, 10:35 AM
              • Reply to Damaged artwork expense
                by ram

                As per above, as the place is "part-furnished", which will not incude pictures on walls.

                It's a gift to a stranger. ( They are not family, not close friends - etc. ) and not a claimable expence in any way..
                ...
                25-09-2021, 16:05 PM
              • Reply to Damaged artwork expense
                by nukecad
                I'd see this as an altruistic gift to your tenant and leave it at that.

                My previous LL (although he had his faults) used to buy the 3 of us in his small HMO a £20 case of beer each at Christmas, I doubt he tried to claim it off tax.
                25-09-2021, 15:46 PM
              • Reply to Damaged artwork expense
                by jtufty
                Its let "part-furnished". (she didnt have a bed, so I put a bed in there, and the white goods, and the [now-broken] picture and a few other bits n bobs)...
                25-09-2021, 15:13 PM
              • Reply to Damaged artwork expense
                by Section20z
                You don't need to write anything. Retain the receipt and just include the appropriate amount in youR expenses/capital totals...
                25-09-2021, 13:57 PM
              • Reply to Damaged artwork expense
                by ram

                We assume the place is let as furnished ?

                I don't think pictures are classed as furniture / but then again, a mirror screwed to the wall - if broken by the tenant, then the tenant pays.
                So pictures ? not sure.
                I would charge the tenant the cost of replacement.
                ...
                25-09-2021, 11:43 AM
              • Reply to Damaged artwork expense
                by jtufty
                Thanks guys. I dont know what came over me! A momentary wave of altruism. Most unlike me!

                I have the receipt. What should I log it as? Should I literally just write "capital expense" or should I be more specific such as "replacement of broken picture"?
                25-09-2021, 06:45 AM
              • Reply to Damaged artwork expense
                by jpkeates
                It's a replacement item of furniture and its allowable as such.
                There's an inevitable element of betterment when you replace one thing with another.

                And £40 is neither here nor there as a capital item.
                24-09-2021, 13:16 PM
              • Reply to Damaged artwork expense
                by Section20z
                That sounds definitely like an improvement as you didn't have to splash out £50 you crazy dude.
                £10 down to repairs and £40 capital expense I reckon.
                24-09-2021, 11:59 AM
              • Reply to Let Property Campaign.
                by armour
                No Neelix, I don't approve of tax evasion.

                As it happens, I am the friend who has convinced the lady that it was best all round if she made a clean breast of it and fessed up as soon as possible via the Let Property Campaign and am using such talants as I posess to help her to do so....
                23-09-2021, 07:46 AM
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